Bartlett: Dynamic Effects Of The Minimum Wage

May 6, 1998

The minimum wage has both static and dynamic effects, says NCPA Senior Fellow Bruce Bartlett. The static or first-order effect is to give higher wages to those previously earning less. But the dynamic effect is to foreclose job opportunities for many who would be happy to work for less, but are now prevented by law from doing so.

When a teen-ager cannot get his first job, he often loses enormously valuable skills, such as learning to be punctual, to follow orders and to take responsibility. Those who do not learn these lessons as teen-agers find them much harder to learn as adults.

For many employers today the most valuable thing a prospective worker can have on his resume is not his education, but a proven history of productive work. Employers will frequently take a chance on someone lacking specific job skills, but with a good attitude and references from previous employers.

The minimum wage is one reason why some employers prefer to hire aliens over native Americans, since aliens often have better work habits than better-educated, but less reliable natives.

The impact of lost job opportunities by teen-agers, especially minorities, is often casually dismissed by supporters of a higher minimum wage. Teen-agers are a small segment of the labor force and seldom need to support families. Unfortunately, many of them go on to become unemployed adults, because they missed that first rung on the ladder. The cost to them and to society is enormous. The prisons and homeless shelters are filled with such people.